Leong Sze Hian
I refer to media reports about the corporatisation of Changi airport, and that business at Changi airport has also been affected by the recession.
Some questions that have been raised are: Who benefits from the transaction when a state agency is corporatised or privatised? If an agency is sold, what is the price? If it is privatised, who benefits from the capitalisation?
Since the transaction price to Temasek Holdings will be settled after a separate valuation exercise by the Government, I would like to suggest that this be tabled for further debate in Parliament.
Of course, it may seem quite strange to debate the sale of a strategic state asset, when the price is still not known
How complicated or long can it take for an estimated valuation to be made available when this was first announced in Parliament in October last year?
All our three power generation companies given to Temasek have been sold to foreign companies.
I do not recall any debate in Parliament on the sale of our power companies, to foreign companies.
Like power companies, Changi airport is a strategic state asset. So, I would like to suggest that if Temasek decides to sell Changi in the future, we should ensure now as the corporatisation has been announced, that it be subject to Parliamentary approval, unlike the case of our power companies.
Since we will eventually know the price of this major asset transfer to Temasek, why not disclose the price for major state assets transferred in the past, like the Port of Singapore Authority (PSA) and Singapore Power (SP)?
Such greater transparency would be in line with the 24 principles that Sovereign Wealth Funds (SWF) like Temasek and GIC have subscribed to, to enhance greater accountability and transparency.
With the public’s concern over the recent 21 per cent electricity tariff hike, in spite of the estimated $1.6 billion total combined power sector profits for the last financial year ; and the share price of SingTel (largest ever state asset sale to Singaporeans) at about $2.47 which is still below its $3.61 IPO price in 1993, now may be a good time for us to re-examine and evaluate the hows and whys of privatisation of state assets.
The common man may not have benefited much from the previous privatisation of essential services like public transport, electricity and telephony, as it may have led to ever increasing profits for the operators and increasing charges for Singaporeans.
How, and through what process and criteria are used, to determine the transfer of state assets? Will the day come when all our state assets are corporatised? Using the power companies as a case in point, will all our state assets be someday owned by foreigners?
Does this mean that there may be less scrutiny, accountability and transparency, than if the assets were held in the hands of the state?
For instance, in the issue on the “21% electricity hike”, it was revealed that certain supplier contracts could not be disclosed for reasons of commercial confidentiality between private parties.
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Formerly state agencies are “sold” to Temasek for a song in order to bloat its asset worth for more investment in failed ventures.
Example; People (i.e. the citizens) contributed to the building up of PWD (our fomer Public Works Dept), thru taxes paid for infrastructure works (roads, bridges, substations etc).
PWD was then corporatised and sold to Temasek as PWD Corp. When PWD Corp was profitable, it was then sold to an australian conglomerate and subsequently renamed/ rebranded as CPG Corp.
The people (i.e. the citizens) gained nothing out of this transaction despite having built it up from scratch. Money from sale then goes to Temasek for “wasteful dumping” into failed overseas investments.
In ancient days, this would have been like british/ french forces ransacking the imperial palace for “national treasure”.
When strategic national assets are controlled by foreigners, where is our sovereigncy to govt this country. Are we selling our country to benefit just a few?
quote : “The common man may not have benefited much from the previous privatisation of essential services like public transport, electricity and telephony, as it may have led to ever increasing profits for the operators and increasing charges for Singaporeans.”
TH has absolute ZERO capability to build itself up from scratch and thus resort to unfair monopolistic practice of acquiring these huge state owned companies, all done in the name of privatisation/corporatisation which in reality is just to to boost their asset net worth instantaneously. State owned companies like utilities are guranteed money churning entities due to the ever demand for their services.
And in the name of building up its WEALTH, which we have also seen it being squandered in miraculous speed, TH has subjected the citizens to the wimp and fancies of these privatised utility companies in setting up of charges, whose priorities will forever be allegiance to the pte shareholders rather than to essential needs of citizens.
The people of singapore has toiled their lives to build up all these utilities through the years only to find themselves being short-changed by the recent pathetic $0.02 reduction in transport fares !
To conclude, in my opinion, utilities SHOULD NEVER be privatised or corporatised. It is a fallacy to think that thru privatisation, consumers or commuters will benefit through open competition as in our case, it has definitely not proven to be so.
# 2) David,
“When strategic national assets are controlled by foreigners, where is our sovereigncy to govt this country. Are we selling our country to benefit just a few?”
I seriously doubt our govt has ever considered this in their haste to pump up the account book for his great Daught-In-Law to boast and control. Now that she has proven her business acumen in losing billions, it is timely to revisit and question the need to privatised or corportised these state companies, and if possible, can we “purchased” them back before these foreign companies start to control every aspect of our lives.
Where is Mas Selamat ?
How much is HDB flat cost of construction?
Uniquely Singapore, a country that sells its strategic assets (e.g. power supply) to foreigners.
let us be clear on temasek holdings’ “growth in assets” that are always constantly pandered around in state newspapers. this growth in assets came from the sale of state owned enterprises and transfer of money from MOF into the accounts of TH and GIC.
its as good as you having a share account of 1k, and your father transferring 1k in and you call the growth an amazing 100%.
LTA builds the MRT networks using taxpayers’ money and leaves the operation to SMRT. SMRT justifies its annual fare increases by saying it is a private company. Where’s the logic?
Sigh, anything that can be sold in this country is broken up and sold bit by bit (like AIG?) Doesn’t come under purview of the president. Useless key anyway. When the PAP loses power, the new government will find itself managing an empty shell. That is why I say we must vote for change now. Like gobal warming, we may already be at the tipping point of no return.
A good article. Thanks Sze Hian.
My trust in the PAP government is getting less and less as the days go by.
The Singapore government (difficult to tell the difference between Temasik, GIC, Singapore government and PAP) should practice transparency, accountability, due diligence when it comes to handling large sums of money belonging to the people of Singapore.
The promises trumpetted by the PAP that globalisation, free trade agreement, privatisation would be good for Singapore has come to nought and has brought untold hardship and suffering for the citizens of Singapore.
The PAP needs to reinvent itself by electing a new set of leaders, retiring Lee KY and Lee Hsien Loong if it is to retain the two-third majority in parliament
I see a crime being committed every other day, but I could do nothing…
The PAP think as long as their misconducts are not discussed publicly in the state-controlled media, they can do anything they like.
As long as Sze Hian’s article stays here, they think they are safe.
But more and more people are sensing the outrageous nature of the whole thing. I hope the day will soon arrive, when all their past misdeeds will be dug out and exposed under the sun.
Changi Airport is possibly the last vestige of our state grown enterprise that once corporatised under the flagship of TH, it will in no time be sold to the highest bidder as TH is not in the business to manage airports or for that matter, any company under its arm.
And all the “software” knowledge of building up this airport thru the decades from scratch will be sold together with the hardware. The same goes for our other utilities that have already been sold. And I’m not sure you can put a price tag on such knowledge softwares as they are built from the hardship and trial & error of the teams behind these state companies.
In time to come, we will have no national company that we can be truly proud of. Will we be able to reconcile that Changi Airport being no. 1 but belongs to some american or aussie company ?
Great article.
BTW (http://www.channelnewsasia.com/stories/singaporelocalnews/view/412308/1/.html)
Our pm said that
” He said: “If you jump up and down and you want to break even and make money every quarter, you will not be able to have a sensible policy. You will end up not protecting your value, you cannot discuss Citigroup as Citigroup.”
Does this make sense to anyone?
even if citigroup makes 10% every year for 10 years, it would only constitute a return of 5% in USD and that is lower than its previous release average return of 7.8%.
Does anyone find it surprising that the return of GIC kept going down? (From an average of 8% to an average of 7 to …)
Our PM doesn’t know what he is talking about.
http://www.forbes.com/feeds/afx/2009/02/27/afx6106210.html
How difficult it is to outperform equities in 2008?
especially after capital injections into GIC.
7) lalalala on March 1st, 2009 7.29 pm let us be clear on temasek holdings’ “growth in assets” that are always constantly pandered around in state newspapers. this growth in assets came from the sale of state owned enterprises and transfer of money from MOF into the accounts of TH and GIC.
20 years average 19% return even during 80′s recession, asian financial crisis, sars, never show how we got 19% over 20 years average.
Foreign companies owning strategic assets here. Foreigners taking on more and more of the jobs here, owning properties, using the scarce and already over-stretched resources here. No wonder we need extraordinarily talented people who command extraordinary pay to build a nation here. Foreign talent in our Cabinet would be a good idea. With the kind of pay that is offered, it shd not be a problem to entice them to join.
Sze Hian, kudos to you for raising such relevant issues for discussion.
#3 catOnhotTinRoof
“To conclude, in my opinion, utilities SHOULD NEVER be privatised or corporatised. It is a fallacy to think that thru privatisation, consumers or commuters will benefit through open competition as in our case, it has definitely not proven to be so.”
Absolutely, cat. Many of us here share your sentiments. Any enterprise once privatized is expected to run on a profit basis, and the plausible questions that may then arise: What is the annual rate of return the private owner[s] is/are aiming for? What new pricing structure should be enforced? Etc. What can consumers do if the new owner[s] is/are aiming for a high annual return of say 30%, 40% or higher? Nothing! Consumers are at the mercy of such service providers.
#8 Jim Tan
“LTA builds the MRT networks using taxpayers’ money and leaves the operation to SMRT. SMRT justifies its annual fare increases by saying it is a private company. Where’s the logic?”
Yes, where’s the logic? The logic appears to be that profitability can only come from privatising the enterprise. I think that at some point in the past the govt acquired the idea that every govt sector should operate on a commercial basis, that is, yearly total revenue must exceed yearly total operating cost. The head of the car-parking division, for instance, may have to review the balance sheet for his division to ensure that revenue [from selling parking coupons and other collections from provision of parking lots] is in excess of or no less than overhead cost; otherwise, time to jack-up parking cost. Hence the incremental rise in car-parking cost over the years.
What are taxes and other sources of revenue for? To overflow govt coffers to make it possible for high salaries for ministers and top civil servants? Or to pile up the surplus year after year? Except for one or maybe two occasions, the govt has never incurred any operating deficit for the past say, 30 years. That’s an excellent record, no doubt. But for whose benefit, mainly? For only a few course!
17) wkc,
“What are taxes and other sources of revenue for? To overflow govt coffers to make it possible for high salaries for ministers and top civil servants? Or to pile up the surplus year after year? Except for one or maybe two occasions, the govt has never incurred any operating deficit for the past say, 30 years. That’s an excellent record, no doubt. But for whose benefit, mainly? For only a few course!”
Great analysis you’ve got here. Totally agree with the surpluses benefitting the justification for million dollar salaries.
The global financial crisis has certainly put our govt in the spot light and thus revealing alot of hidden agendas within their governance. We now realise that singapore success is not entirely due to the talented leadership of the people who pay themselves millions, but rather riding on the ups and downs of the global economic wave.
“When the silent tsunami makes landfall, the least prepared and those still in denial will be washed away with their illusions of invincibility and good management”
This sum up our holdings in billions of dollar in the long term investments, so true what Warren Buffet said about TH, GIC, and our Ruling Party Illusions of invincibility.
Hello friends,
I have a question on public services billing.
We know gst is 7% as of now.
if business round up the GST amount, am I right to say that I am billed more than 7% GST, i.e 7.xxx% instead of the 7%? does this imply > 7% gst ??
for example,
bill w/o gst = $103.38.
bill w 7% gst = $110.6166
actual bill = $110.62
Does this not mean I am being charged > 7% gst when by law, only 7% is the gst chargeable?
To 20) Question on March 2nd, 2009 6.02 pm
The service provider or firm is taking the whatever amount when rounding up.
They only need to pay 7% GST nothing more
Hi Tan KL,
thanks for replying so fast. appreciate it. :)
when they round up, they are indirectly charging more than 7 % at least technically speaking?
yes, to 1 customer, this 0.01 cent is little. But imagine. Imagine what is 0.01cent received from 1,000,000 customers ? that is a cool $10,000.00 bucks!. Real money nevertheless.
So, I am not arguing for that 0.01 cent. I am curious to know does this mean in such cases, the company has violated the law by charging more than 7%? And if one considers this 0.01 cent as little, should this not be a reason for companies to round down instead and thus charge 0.01 cent less? as in absorb 0.01% gst?
So, my question is about principle and not the 0.01cent. Just to clarify.
check all your monthly bills, one and all. No big deal but maybe we get to realise something?
cheers.
State asset which are of strategic importance should not be put up for sales because it is priceless… Just like the love of a mother over her child, our very own people will look after this asset better than the foreigners… The incentives to sell this asset should not be based on factors such as profit and $$$.
I still don’t understand
why ALL THREE POWER GENERATOR been sold? Aren’t they strategic asset like water consumption?
25) market2garden on March 2nd, 2009 10.39 pm
” I still don’t understand why ALL THREE POWER GENERATOR been sold? Aren’t they strategic asset like water consumption?”
TH needs to shore up its liquidity for aggressive investments and thus selling these power plants to fulfil this.
It’s like a gambler selling his 3 children to amass funds for further gambling !
If Temasek can buy foreign assets, there is no reason why foreign entities are not allow to buy Singapore Assests. But, selling national assets without the agreement of the citizenry is like treachery, especially if the foreign owners exploit the locals for profits and labours. It is like some form of back-stabbing to the locals.
let’s reflect on the sale of national assets, the manner in which it was done.
Was there some kind of national debate ? Were PAP MPs allowed to vote independently on such an important issue ?
Citizens should be concerned because this govt with an overwhelming majority
in parliament is showing us that it does what it wants. Therein lies the danger of
not having checks and balance in our political system.
Think about it folks, there is nothing to stop this govt from even selling S’pore,
because unwittingly we have given them absolute power, nicely served on a platter !
Eventhough It is just unthinkable that it will ever happen, we need to remember Lim Yew Hock, then chief minister of S’pore in the early years,
actually sold Christmas Island to Australia.
We must bear in mind, only desperate men need desperate measures.
Isn’t selling our national assets an indication of desperate measure ?
Most commentators here seem to think ‘state-owned’ assets shouldn’t be sold. I disagree.
“Best” comment:
“Think about it folks, there is nothing to stop this govt from even selling S’pore,
because unwittingly we have given them absolute power, nicely served on a platter !
Eventhough It is just unthinkable that it will ever happen, we need to remember Lim Yew Hock, then chief minister of S’pore in the early years,
actually sold Christmas Island to Australia.”
What a slippery slope argument. Furthermore, Christmas Island belonged to the UK, not to Singapore. This is the worst reasoning I’ve heard for some time.
@ 29 eternalhap,
did you actually do history on Singapore ? go check again whether Christmas Island belonged to S’pore. Lim Yew Hock was the chief minister then, and he secured independence from the British. Lim’s govt was the legitimate govt
and as chief minister he was responsible for selling the island to the Aussies. Whatever the reason is not the point, it was still sold.
Read my post again carefully, perhaps it did not occur to you that giving absolute
power to any govt is already going down a slippery slope.
A govt that does what it wants without any form of debate especially on issues
that concern its citizens, like selling national assets, is already going down a
slippery slope. What about the investment losses, lack of transparency and accountability ? To you it is ok ? For our sake , I hope you are in the minority.
Do you recall any of the PAP MPs giving their opinion ? Debate ?
Don’t you think they should speak up or at least pretend to say something ? lol
Afterall they are suppose to represent the people who voted for them. Right ?
Having 82 PAP MPs with so many incapable of speaking up is an indication
we are already down a slippery slope.
Isn’t it about time, we citizens think of ways to put the brakes on,
before we do ourselves in.
Thanks Sze Hian for the courage to expose the government for systematically and blatantly robbed the people of the valuable assets built over time with the blood and sweat of the people.Tamasek kept the proceeds of the sale of assets and proceed to squander them away in reckless ventures and the people face rounds and rounds of unbearable price increases.
Assets are not moveable things but when its sold for cash, it is something else understand the point you guys. Whenever an asset is sold, someone or party makes the money??? simple as that, case closed. Lets grow up and stop arguing about things that we cannot control now becuase of our stupid mistakes to vote these people into power for too long.